Mercedes-Benz delay battery factory expansion amid lower EV sales

Mercedes-Benz has decided to pause plans to expand its battery cell capacity, as the demand for electric vehicles (EVs) has not met earlier projections. The German automaker announced in 2022 that it would require over 200 gigawatt hours (GWh) of battery cell capacity by 2030, planning to establish eight cell factories worldwide, with partners including four in Europe.

However, Chief Technology Officer Markus Schaefer stated on Monday that the company no longer sees the need for such extensive capacity by 2030. This adjustment follows a revision in Mercedes-Benz’s forecast, which now predicts that electrified vehicles, including hybrids, will make up 50% of their total sales by 2030, rather than by 2025 as previously expected.

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Schaefer explained that the initial 200 GWh capacity was based on the assumption that all of Mercedes-Benz’s annual sales, around two million vehicles, would be electric by the end of the decade. With current demand lower than anticipated, the company is reconsidering its timeline.

“Is the 200 gigawatt hour capacity still necessary? It’s a question of the timeline,” Schaefer said.

Mercedes-Benz has partnerships for battery supply, including a deal with Chinese firm CATL, which is building a 100 GWh plant in Hungary. The automaker will also receive cells from a 40 GWh plant in France through joint venture ACC, in which it holds a 30% stake. Plans to build additional ACC plants in Germany and Italy were paused last month due to low EV demand. The company also has suppliers in the U.S. and China.

“We are relatively flexible. We will think about the next steps when we have more transparency on demand,” Schaefer said, emphasizing that the current supplier relationships are sufficient for the near future.

Despite this pause, Mercedes-Benz continues to invest in electrifying its product lineup. Schaefer noted that significant investments are not being directed towards combustion engine cars, except for necessary updates to meet emissions regulations.